As you research the process of purchasing a home, you’ll undoubtedly come across information about how important your down payment is. Making a substantial down payment on your house serves many functions including:
- Saving you money over the life of your loan.
- Getting you a better mortgage interest rate.
- Showing lenders that you are a good candidate for a loan.
Generally, most homebuyers are encouraged to save as much as 20% of the home’s value to be put toward a down payment. While recommendations will vary based on your unique financial situation and your goals, this article will outline some of the top tips for saving for your house down payment.
Save Any Unexpected Earnings
Holiday bonuses, gifts, or money that is willed to you after the death of a loved one may be tempting to spend on something fun. However, it is a good idea to save this money and put it toward your down payment. These unexpected earnings can go a long way in helping you make a more significant down payment and, in turn, improving your financial status in the long run.
Create Habitual Saving Techniques
Every month, ensure that you are saving a reasonable amount to put toward your down payment. You don’t need to go crazy; depriving yourself of ever having dinner out or going to see a movie will just depress you and make the process harder. However, the more you can save as part of your monthly routine, the better.
Seek Out Free Sources of Entertainment
You need a break every once in a while. But many sources of entertainment can end up being quite expensive. Therefore, it’s a good idea to find free or very affordable ways to have fun so that all of your extra money can be put toward your down payment. Things like hiking, going to free concerts, and streaming free movies are great ways to cut costs and divert more money into savings.
Consider a Side Gig
An extra job may not be a viable option for everyone, but if you find that you have a few hours free on weekends, you may consider picking up some extra hours babysitting, giving music lessons, tutoring, or pursuing another casual source of income. Even just a few extra hours a month will go a long way over time.
Adjust Your Budget
When was the last time you took a look at all of your subscription services? How about your memberships? If you find that some of these costs can be reduced or cut out entirely, you’ll be able to save that extra money and really put a dent in your upcoming down payment.
Work with a Mortgage Professional
If you feel overwhelmed by the homebuying process, a mortgage professional can help. These experts are available to help guide you through your homebuying journey and they will ensure that you understand all of the requirements necessary to get you into your dream home. Call a mortgage expert today for a consultation.